Canyon Resources to acquire highly prospective African gold projects

Canyon Resources (ASX: CAY) has entered into a binding agreement to acquire control of the Taparko North and Tao Projects in North Eastern Burkina Faso, West Africa, through the purchase of Askia Sarl Pty Ltd.

Subject to due diligence, Canyon will acquire Askia Sarl and the gold projects, through the initial issue of 3.25 million Canyon shares to the vendor (or nominees) of Askia Sarl.

The gold projects are located in the Birimian Greenstone Belts of the West African Craton and are considered highly prospective for the discovery of large gold deposits.

Both projects are located in favourable structural and geological settings with the Taparko North Project situated along the north east striking structural corridor which includes the major gold endowed Markoye Fault.

The Taparko North Project lies in the the same greenstone belt that hosts the 2 million ounce Taparko gold mine and the 1.7 million ounce Inata gold mine. The project is also situated in the Markoye Fault corridor that hosts the Essakane, Taparko and Bombore gold deposits and numerous artisanal gold occurrences.

The Tao Project lies in the greenstone belt which hosts the largest identified gold deposit in Burkina Faso, the 5 million ounce Essakane gold mine. The project is situated on a parallel, north east striking structure that hosts numerous artisanal gold operations.

The vendor and associates of Askia Sarl have worked extensively in Burkina Faso and have previously been involved in the identification and discovery of a significant gold deposit with a current JORC compliant resource of over 1 million ounces.

Canyon has conducted a site visit with representatives of Askia Sarl. Due diligence is expected to be finalised by mid October 2010, after which Canyon plans to immediately commence exploration on the gold projects.

Initial exploration will include a first pass geochemical exploration and RAB drilling program.

Chris Connell, Canyon Resources’ exploration manager said “both the Taparko North and Tao Projects cover highly prospective Birimian greenstones along with major gold endowed structures."

"There is active shallow artisanal mining being conducted by local people on both Projects and we sighted primary quartz hosted gold specimens being mined at several locations."

"The favourable structural and geological settings represent an outstanding opportunity for the discovery of a large ore deposit within the tenements.”
 
Phil Gallagher, managing director, said "Canyon’s acquisition of the Taparko North and Tao Projects will strengthen its asset portfolio by providing exposure to a region in West Africa that is highly prospective for hosting large gold deposits, while we continue to progress the exploration of our Western Australian gold project.”

To maintain ownership of Askia Sarl and the gold projects, Canyon is required, at its election, to issue further shares in staged payments as follows:

- 3 million shares to be issued by completion of the first field season (30th April 2011) of exploration and results of the exploration being to Canyon’s satisfaction; and
- 2.5 million shares to be issued by completion of the second field season (30th April 2012) of exploration and results of the exploration being to Canyon’s satisfaction.

In addition, subject to the achievement of certain project hurdles, further issues of shares to the vendors (or nominees) of Askia Sarl will be made as follows:

- 5 million shares to be issued subject to the definition of a 500,000 ounce indicated gold resource; and
- 10 million shares to be issued subject to the definition of a 1 million ounce indicated gold resource.

The structure and terms of the consideration are subject to shareholder and ASX approval.

Canyon Resources shares rose 17% to 34 cents in trading today. The company had 3,218,000 cash at the end of the June quarter.